Italian Court Rules UniCredit Must Exit Russia to Complete Banco BPM Takeover
An Italian court has made a significant decision regarding lender UniCredit’s proposed takeover of rival Banco BPM. The court has confirmed that UniCredit must comply with a government demand to exit from Russia if it wishes to proceed with the acquisition, dealing a blow to chief executive Andrea Orcel.
The ruling, which was issued in response to a request by Giorgia Meloni’s government, stated that the demand for UniCredit to exit Russia is “totally legitimate” and that there is no doubt about its propriety. However, the court partially upheld an appeal by UniCredit regarding other measures imposed by the government as conditions of the takeover.
In a landmark decision published on Saturday, the court struck down government prescriptions related to BPM’s post-merger loan-to-deposit ratio and the maintenance of project finance portfolios in Italy for both banks. This ruling marks the first time that the administrative court has rejected government requirements in a strategic takeover deal, effectively nullifying the existing text of the government’s decree.
Orcel had previously expressed concerns that the deal could collapse if the government did not relax its demands. The uncertainty surrounding the situation has left the proposed takeover in limbo, with the BPM offer period set to end on July 23.
Following the court’s decision, BPM issued a statement expressing satisfaction with the outcome of the appeal and urging UniCredit to clarify its intentions regarding the takeover. UniCredit, on the other hand, declined to comment on the ruling, with the bank’s board scheduled to convene in the coming days to discuss the next steps.
UniCredit, Italy’s second-largest lender, initiated simultaneous takeover bids for BPM and Germany’s Commerzbank last year. While UniCredit has reduced its exposure to Russia in light of the country’s actions in Ukraine, it remains one of only two European banks with a local subsidiary in Russia.
Orcel has been reluctant to completely exit Russia to avoid potential financial repercussions, as any withdrawal would need to be approved by Russian authorities. The future of the UniCredit-Banco BPM takeover now hinges on how both parties respond to the court’s ruling and whether the government decides to revise its decree in light of the judges’ decision.
